House GOP seeks to defuse debt crisis

With tacit support from President Barack Obama, House Republicans are moving to try to defuse a potential debt crisis with legislation to prevent an economy-rattling fiscal crisis for at least three months.

The GOP legislation marks a tactical retreat by House Speaker John Boehner, R-Ohio, who is eager to avoid a potential first-ever default on U.S. payment and debt obligations as he wrestles with Obama and his Democratic allies over taxes, spending and the deficit.

Wednesday’s legislation would give the government enough borrowing leeway to meet three months’ worth of obligations, delaying a showdown next month that Republicans fear they would lose.

It also contains a provision that slaps at the Senate, which hasn’t debated a budget since 2009, by withholding the pay for either House or Senate members if the chamber in which they serve fails to pass a budget plan.

This “no budget, no pay” idea had previously been regarded by many as a gimmick but has been given new life by Boehner as a “reform” to pair with an increase in the so-called debt limit. Boehner previously had insisted that any increase in borrowing authority to avoid lapses in payments to contractors, unemployment benefits or Social Security checks — and possibly even interest payments on U.S. Treasury obligations — be matched dollar for dollar with spending cuts.

House Republicans appear confident that they’ll have the votes to pass the measure even though most Democrats are expected to vote against it because it sets the stage for another potential debt crisis this summer.

But the White House weighed in Tuesday with a statement that the administration would not oppose the measure, even though Obama just last week dismissed incremental increases in the debt ceiling as harmful to the economy.

It also appeared that Senate Democrats would grudgingly accept the bill.

The idea driving the move by GOP leaders is to re-sequence a series of upcoming budget battles, taking the threat of a potentially devastating government default off the table and instead setting up a clash in March over automatic across-the-board spending cuts set to strike the Pentagon and many domestic programs. Those cuts — postponed by the recent “fiscal cliff” deal — are the punishment for the failure of a 2011 congressional deficit-reduction supercommittee to reach an agreement.

These across-the-board cuts would pare $85 billion from this year’s budget after being delayed from Jan. 1 until March 1 and reduced by $24 billion by the recently enacted tax bill. Defense hawks are particularly upset, saying the Pentagon cuts would devastate military readiness and cause havoc in defense contracting. The cuts, called a sequester in Washington-speak, were never intended to take effect but were instead aimed at driving the two sides to a large budget bargain in order to avoid them.

But Republicans and Obama now appear on a collision course over how to replace the across-the-board cuts. Obama and his Democratic allies insist that additional revenues be part of the solution; Republicans say further tax increases are off the table after the 10-year, $600 billion-plus increase in taxes on wealthier earners forced upon Republicans by Obama earlier this month.

“We are not going to raise taxes on the American people,” Boehner told reporters.

“We feel by moving the issue of raising the debt ceiling behind the sequestration … that we reorder things in a way that Democrats will have to work with,” Rep. John Fleming, R-La., said. “The cuts are the kind of cuts we want, they’re just not in the places we want. But they’re also not in the places that the Democrats want. So hopefully they’ll be forced to come to the table and work with us on a bipartisan basis to put them where they need to be, where it has the less pain.”